Sydney 2010

Over and Out

Wednesday, August 11th, 2010

Posted by:
Tony Wyllie
Head of Corporate Solutions, Australia

We heard a lot about creative and innovation cultures over the two days of CoreNet and saw some great examples of where this has been implemented into corporate real estate strategy. What I took away is that most organisations already have this talent, they just need to provide the workplace to release it.

We heard how organisations should manage by results, not attendance and give their employees the flexibility to not only control their work-life balance, but create their own life rhythm, as Vodafone has done.

We heard about how leases will all need to be accounted for on balance sheet and how this will have an impact on profit and loss ratios and an organisation’s debt arrangements. We heard detail on the break-neck speed of the Telstra transition – over 14,000 sites in less than 45 days.

There was a lot to absorb on a very full agenda and I appreciated the opportunity to hear from other organisations how they are tackling the challenged of balancing innovation and at the same time keeping a keen eye on costs.

This is the closing post on our CoreNet blog from the Sydney Summit. I hope you have enjoyed the dialogue and I look forward to joining the conversation on future CoreNet summits. If you would like to further the discussion on any subjects we have commented on in our blog, please feel free to drop me a line on 02 9220 8729.

Tony

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Life Rhythm- The Vodafone Way

Tuesday, August 10th, 2010

Posted by:
Gavin Martin
Director, Tenant Representation
Corporate Solutions

Vodafone has grown from a 50-person office in Newbury, UK in 1984 to a turnover of 41 billion euro and 80,000 staff today. Their workplace requirements have changed substantially!

The latest part of their journey is incorporating flexible work practices into their real estate strategy. Two of Vodafone’s key developments led the way for their change transformation, these being the headquarters in New Zealand followed by their new Headquarters in Amsterdam, Holland.

Vodafone challenged existing paradigms in workplace practices and introduced the concept of Life Rhythm – where they empowered their people to choose a working style that suited their lifestyle. Management’s thinking had to change from measuring people by results not attendance. Even areas like HR and Accounts adopted these work practices with people in these teams encouraged to interact with the business and not sit at their desks. 80% of the HR staff in Amsterdam facility did not have a desk and 60% of the Accounts team did not have an allocated desk.

As well as driving better engagement, productivity and showcasing their product suite, Vodafone’s workplace strategy also resulted in a 25% cost saving across their portfolio, equating to 400 million euro.

Vodafone soon realised that a one size fits all approach would not work across their global portfolio. The key to getting it right is finding the appropriate balance between technology, culture and space. The global CRE team at Vodafone have just two KPIs – 12 sqm per person and 120% efficiency in their portfolio. How the local teams achieve these targets is up to them.

Gavin

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The Balance of Probability

Thursday, August 5th, 2010

Posted by:
Tony Wyllie
Head of Corporate Solutions, Australia

The days of operating leases (off balance sheet) versus finance leases (on balance sheet) may be coming to and end with the proposed changed in the International Accounting Standards. Under the new standards all leases will need to be accounted for on balance sheet.

Whilst the cash position of the organisation won’t change – rent will still be paid at the agreed rate – it will be accounted for differently. There is likely to be front-loading of leases with more rent accounted for in the earlier years of the term. This will impact organisations’ profit and loss ratios which have implications for debt arrangements.

CREs will be faced with the ‘balance of probability’ forecasting, having to decide at the start of lease the likelihood of exercising an option, a rent review occurring, what the review amount will be, whether expansion or contraction rights will be utilised. A bit of crystal ball gazing! Added complexity is that investors will be operating under different accounting standards, so the structuring of a lease transaction may be a more protracted negotiation.

The Draft Exposure for these changes is due in September of this year, with full implementation likely to be 2012/2013. However, companies need to start considering the implications and preparing for the impact now. Many organisations will need to overhaul their lease administration systems and may need to staff-up as they are asked to weigh up the balance of probabilities.

Tony

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Driving, Not Killing Creativity

Wednesday, August 4th, 2010

Posted by:
Cameron Scott
COO Integrated Facilities Management – Asia Pacific

Greetings from CoreNet. I am attending the conference here in Sydney along with some colleagues from the firm. In the ‘Leading Creative People’ session we were introduced to approaches and tools for increasing creative thinking in the workplace. What is interesting to know is that that there is plenty of creative talent in every organisation. It is just a matter of tapping into it and then implementing the ideas that spring from it. We learned that we need to give people permission to be creative, that the challenge of management is to make every employee part of a creative culture and that it is ok to make mistakes.

Did you know that the Top 5 creative drivers are:
1. Self-fulfilment
2. Recognition
3. Being part of a team
4. Artistic Integrity
5. Financial Compensation

And that the Top 5 creative killers are:
1. Risk Aversion
2. Wrong creative structure
3. Time
4. Not listening
5. Status Quo

The session prompted me to think about the way we manage creativity in Jones Lang LaSalle. My conclusion: we have the creative talent – we just need to take the time to cultivate it. I think the tools and technical presented at this session can help us do just that!

Cameron

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Communication, Communication, Communication

Wednesday, August 4th, 2010

Posted by:
Kevin Hastings
Head of Project & Development Services, Australia

We heard from Vito Chidio that the mantra of location, location, location should be replaced with communication, communication, communication in corporate real estate departments.

Communication has many facets – within our own teams, with business unit stakeholders and with the market. I liked Vito’s comment about Telstra engaging with industry before they made a decision to issue an RFP, to understand what thinking was out there that could help them deliver a better real estate solution to the business. Weoften we see companies go straight to the RFP stage without garnering opinion from the industry.

The Telstra transition to Jones Lang LaSalle happened in record speed – 45 days. Communication was key to the success of this transition across 14,000 sites. Simple things like a daily email updating on progress, co-locating the Telstra and Jones Lang LaSalle teams and agreeing a set of guiding principals up-front.

In Vito’s summation of the DNA of corporate real estate, the characteristic that resonated most with me was taking calculated risks. You aren’t going to go anywhere by standing still. But in taking those risks, you need to foresee and understand the risk to make the correct calculation.

Kevin

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